Broken Promises Behind BT CEO Exit

7 Comments

In 2006 I had traveled to London to meet British Telecom (BT) CEO Ben Verwaayen and his team, hoping to get a first hand look at how Verwaayen and his team were trying to overhaul the company well known for its iconic phone booths.

They had put in place a strategy to diversify into IP services, build a brand-new 21st CN (UK broadband network) and, to cap it all, plans to become the carrier of choice for large multinationals. It ended up as a long feature in the August 2006 issue of Business 2.0.

The 56-year-old former Lucent executive Verwaayen resigned earlier this week after six years at the head of BT. He is being replaced by 43-year-old Ian Livingston, who until recently ran BT Retail and was seen as the maverick to make BT Retail a force to reckon with.

Livingston, before joining BT, was group finance director at electrical retailer Dixons and had helped set up Internet service provider Freeserve, now part of Orange. Livingston was part of Verwaayen’s attempt to hire folks from outside of telecom industry and bring some consumer-savvyness to a stodgy company struggling to stay competitive with pesky upstarts. He will have his work cut out for him — the company is still too big, too lumbering and too bureaucratic. The 21CN is still nowhere close to delivering its promise. At the same time, BT is facing increased competition from upstart broadband providers like Carphone Warehouse and Virgin. The company has no consumer mobile service, and it continues to lose consumer lines.

Those were the very same issues that put Verwaayen on the hot seat. On his watch, BT had a mixed record. A lot of promises were made, but never fully realized. The only stand out was the Global IT services business. It now accounts for about 40 percent of BT’s total revenue. But that’s about the end of it.

Fierce Telecom points out that “Verwaayen’s decision to leave comes not long after BT reported poor financial results for the fourth quarter and full year of 2007.” In recent months, several executives have left and there are questions about “execution and expense of its 21st Century Network project,” FT goes on to say.

So what’s next? Job cuts, according to some analysts who point to Livingston’s track record. I wonder if one of those will be company CTO Matt Bross, who came to BT at the urging of Verwaayen.

What are your thoughts on BT and its future?

Additional reporting by Irina Haltsonen, who is spending the summer with the GigaOM team.

7 Comments

vijay

The fundamental problem is that networking on a large scale is hard. If networks ran on powerpoint, we’d be good to go, but they don’t. Folks have been pointing out that operational complexity is a killer, but it doesn’t seem to filter through the glossy screen of revenue uptick, capturing the value chain marketing that gets sold. There will be more fun stuff coming down the pike on this one.

Om Malik

I think the big problem with BT and any other old phone company is the attitude towards their customers. they still have the old monopoly mind-set and that is hard to change. That is the single biggest problem. On top of that, the sheer size of a “phone company” makes it incapable of execution and doing interesting things fast.

@ Tommy: They used to own 02. They sold it to Telefonica to bring down their debt and grow their business.

Tommy

The whole thing with Phorm has hurt BTs image. I don’t think I’d ever sign up until the sort it out. But as for “The company has no consumer mobile service and it continues to lose consumer lines.”

Don’t they own O2?

Darren Stuart

I think unless they change they will go the way of the post office when wireless tech gets to a point where you do not need a telephone line.

My problem with BT is offshore call centres, I have a friend that works for thier tech support and says 90% of her work is dealing with complaints from people not happy with the offshore support. However they are not alone in this sky have done this now and I had a run in with their offshore call centres when they killed their outgoing smtp server for all to use with no warning.

BT are stuck between a rock and a hardplace just like the post office.

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